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« CHART: Is Deutsche Bank The New Lehman Brothers? | Main | PHOTO: The Tallest Fed Chairman In History »
Saturday
Apr092016

Bernanke Responds To QE Critics: 'You Were All Wrong!'

DO NOT SKIP THIS VIDEO

BERNANKE CELEBRATES AT FED LOVEFEST

Critics said his decisions including QE and trillions in secret bailouts for Wall Street would cause hyper inflation and asset bubbles. They were half right. Bernanke is now claiming total victory and doing a fantastical two-step on the global Fed stage. For the record, I have consistently written the following since launching Daily Bail in 2009:

We are Japan. The problem was, is, and will remain deflation.

So he is correct about hyper-inflation, but mind-blowingly wrong on Fed-stimulated asset bubbles. And of course he fails to mention the negative consequences of QE -- that the banks got richer, and savers were screwed. It really is that simple. And no fewer than 5 Fed governors have gone on record over the last few years criticizing QE for these exact reasons.

Bernanke's only concern during his reign at the Fed was the health of commercial banks, global insurers and Wall Street. He along with Paulson, Geithner, a clueless Bush and hundreds of Congressional minions, worked frantically and dishonestly to pass a $700 billion bailout that saved bonuses for bankers here and in Europe, and in the end, turned capitalism on its head.

But Bernanke never chooses to mention these unpleasantries. Dance on, Ben. Dance on.

 

 

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Reader Comments (18)

While he was correct about hyperinflation, he still fucked up a lot of shit.
Apr 8, 2016 at 2:23 PM | Registered CommenterDailyBail
So that is how he justifies the "success" of robbing the taxpayer to bailout the people that robbed the investors with slice and dice flaming bags of poo and fraud....

I guess as long as he believes it then it must be true.
Apr 8, 2016 at 2:35 PM | Unregistered CommenterS. Gompers
HEY GOMP - GREAT TO SEE YOU

Bernanke's only concern was the health of commercial banks, global insurers and Wall Street, everything else be damned.
Apr 8, 2016 at 2:39 PM | Registered CommenterDailyBail
Or criminal elite for short, glad to see you still kicking as well.
Apr 8, 2016 at 2:50 PM | Unregistered CommenterS. Gompers
Bernanke's answer to the question posed--how will the Fed unwind its massive asset purchases--is that the Fd will step back and do nothing, so that the purchased assets will mature and "roll off" the balance sheet.

Whenever you hear a theory like this from the Fed, the first thing to do is check the facts to see if they support the theory.

The two largest components on the asset side of the Fed's balance sheet are Treasuries ($2.46 trillion; up from $0.475 trillion before the Fed's bailout, er, asset purchases) and mortgage-backed securities ($1.75 trillion; up from $0.00).

When you look at the Fed's own graphs of these 2 asset classes, you'll see an absolutely flat line for the last 18 months for Treasuries and a slightly increasing line for MBS)...

http://research.stlouisfed.org/fred2/series/TREAST
http://research.stlouisfed.org/fred2/series/MBST

So Bernanke's answer is just Fed QE Rationalization Bullshit 2.0

Fed QE Rationalization Bullshit 1.0 was the notion--endlessly bandied about in FOMC transcripts in 2009-10--that the Fed would either (1) sell off these assets or (2) get rid of them with reverse repos. Neither of those came to pass, of course, because they were bullshit from the beginning. And so, too, is Bernanke's new & improved theory bullshit as well.

The Fed will do WHATEVER IT TAKES to prop up the banks, and we have $1.7 trillion of absolutely worthless MBS on the balance sheet to prove it. The Fed's balance sheet is merely a proxy for the amount of fraud in the system. Place your bets on its size accordingly.
Apr 8, 2016 at 2:52 PM | Unregistered CommenterCheyenne
Whenever Bernanke tells you about what's going to happen with the Fed's balance sheet in the future, as he does here, it's a good idea to look at his track record of projections in the past.

Part of a video I did does exactly this with Bernanke's projections from May 2009. The time-stamped link is here:

http://youtu.be/jt377DV2BKs?t=391

Bottom line comparison of Bernanke's projection for May 2015 vs. reality in May 2015:

Treasuries projected: $750 billion
Treasuries actual: $2460 billion
Bernanke error: 228%

MBS projected: $860 billion
MBS actual: $1730 billion
Bernanke error: 101%

You should take anything Bernanke says about the future with 2 tons of salt.
Apr 8, 2016 at 3:26 PM | Registered CommenterCheyenne
Do we have any idea what the Fed is earning from the RMBS on their books? I know they announce an annual total that they then give to Treasury, but I was curious about just the rmbs component.
Apr 8, 2016 at 4:05 PM | Registered CommenterDailyBail
The Fed's estimated net income from MBS for 2015 was around $100 billion.

http://www.federalreserve.gov/newsevents/press/other/20160111a.htm
Apr 8, 2016 at 5:29 PM | Unregistered CommenterCheyenne
The RE market around here is RED f-ing hot. Look for CT to become a victim soon ala debt. GE is moving to Boston and I see many following that trend. Most have nice places on Nantucket and a couple of folks I know of that worked for both GE and Enron have probably have left the country…

http://www.wsj.com/articles/general-electric-plans-to-move-headquarters-to-boston-1452703676
Apr 8, 2016 at 6:09 PM | Unregistered Commenterjohn
What really pisses me of is former GE and Enron employee, Paul Gaynor (CEO of First Wind and EVP of SUNE who suddenly departed a few weeks ago) did an interview that I linked in one of the articles I did here at the DB on NECN (Owned by GE). He openly bragged about all the stimulus money he got and now NECN has removed that interview.

First Wind was bought by Sun Edison…
Apr 8, 2016 at 6:21 PM | Unregistered Commenterjohn
-(deep sigh)-

..when will we ever learn..?

Yes, the tribal "shylock-parasite tribal types" are never at fault for debasing our currency, trashing our Christian morals, co-opting our politics, controlling our media and infecting our academia / education-system w/ cultural-marxism....etc..etc.

That said: "..methinks, one day in the not too distant future....the retribution they receive as payback..er, call it interest compounded...will amount to much more than "a pound-of-flesh"...**

---------------------------------------------

** R.I.P Mr. Shakespeare....you you had it figured out...centuries ago.
Apr 8, 2016 at 7:21 PM | Unregistered CommenterHunter
Cheyenne

So doing the math: the Fed had $1.73 trillion in mbs from which they earned $100 billion in interest in 2015. So they earned approximately 5.7% on the total. Any idea what the length to maturity is for rmbs? I assume they are mostly long-term bonds. I'm trying to get a handle on how long the Fed will have to hold on before the majority reach maturity and roll off the books.
Apr 9, 2016 at 1:07 AM | Registered CommenterDailyBail
...drag all of these people onstage out into the streets...charge them with treason...convict them...and start hanging them from lamp poles...
RJ O'Guillory
Apr 9, 2016 at 3:22 PM | Unregistered CommenterRJOGuillory
Do these mbs include the deeds to property's that were sold that that were never issued a title? Which means that they hold virtually nothing.
Apr 9, 2016 at 8:00 PM | Unregistered Commenterskinflint
SKIN

Good point. Cheyenne knows this issue inside and out, but I would imagine that yes the Fed owns decent chunk of empty worthless MBS. I'm curious what percentage of the Fed's MBS are non-performing, non-paying, pieces of shit.
Apr 9, 2016 at 8:47 PM | Registered CommenterDailyBail
I listened to a production where C had said as much. That the banks were bundling titles to houses that did not even exist. I just about fell off my chair.
Apr 9, 2016 at 11:07 PM | Unregistered Commenterskinflint
I'm with RJ O'Guillory, hang them all, starting with Bernanke and Henry Paulson.

http://www.zerohedge.com/news/2016-04-22/albert-edwards-finally-blows-im-not-really-sure-how-much-more-i-can-take
Apr 22, 2016 at 1:45 PM | Unregistered CommenterSagebrush

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